Sources of finance
Define sources of finance
Various means in how a business acquires its funds. These methods can either be internal or external.
What is costs
Charges that an organisation incurs from its operations?
What are final accounts
Published accounts of an organisation, made available to and used by different stakeholders, such as managers, employees, shareholders, sponsors, financiers, and investors.
What is the ratio analysis used for ?
used in the interpretation and assessment of a firm's financial statements
what is profit
the value of sales revenue after all costs have been accounted for
An example of internal sources of finance
Sale of assets
Fixed costs
A type of cost that does not change the level of output in production?
What is a profit or loss account
This shows the firm's profit (or loss) after all production costs have been subtracted from the organisation’s revenues, each year.
What are profitability ratios used for?
Assess the performance of the firm in-terms of its profit generating ability
What is working capital
refers to cash or other liquid assets available to an organisation for its daily operations.
Factors that can influence the choice of a source of finance
Businesses will need to consider thoroughly all of the costs associated with obtaining a source of finance.
What is total revenue
The sum of income received by a business from its trading activities
What are dividends
The payments from a company’s profit (after interest and tax) paid to the shareholders (owners) of the company
What are the 3 types of profitability ratios
Gross profit margin, profit margin, run on capital employed
What is current ratio
short-term liquidity ratio used to calculate the ability of an organisation to meet its short-term debts
Advantage of crowd funding
Provides access to thousands of investors who can see, interact with and share a project's fundraising campaign.
What is revenue streams
The various sources of revenue for a business
What are assets
Possessions of a business that have a monetary value
Define profit margin
A measure of a profit that remains after deducting all costs from sales revenue
What is an investment
the purchase of fixed assets, with the intention of creating a financial return in the future
Businesses angels
Wealthy individuals who provide financial capital to small start-ups or entrepreneurs in return of ownership equity in their business.
What is indirect costs
Costs that are not easily identifiable with the sale or output of a specific good, service, department, or business operation.
What is a balance sheet
Set of final accounts that shows the value of an organisation’s assets, liabilities, and the owners’ investment (or equity) in the business at a particular point in time
What is the quick ratio test?
indicator of how well a firm is able to meet its short-term obligations without stock
What are cash flow forecasts
What are cash flow forecasts